Social media class: The Concept of Word-of-Mouth

The development of new technologies, and especially the increasing use of social media by travelers described in the previous chapter, poin...

The development of new technologies, and especially the increasing use of social media by travelers described in the previous chapter, pointed out the need to reconsider the received concept of WOM (also called Buzz), in the light of recent changes (Stauss 1997; Buttle 1998; Breazeale 2009).

Arndt (1967) and Koenig (1985) define word-of-mouth as an oral, person-toperson communication between a receiver and a communicator whom the receiver perceives as non-commercial, regarding a brand, product or service. According to Stern (1994) “WOM involves the exchange of ephemeral oral or spoken messages between a contiguous source and a recipient who communicate directly in real life… WOM communication vanishes as soon as it is uttered, for it occurs in a spontaneous manner and then disappears.” Moreover, WOM is perceived as different from advertising because it is independent and not paid by the company (Stern 1994). For this reason, it is considered genuine and more credible by customers (Bateson and Hoffman 1999; Ogden 2001). In fact, a study of Goldenberg et al. (2001) demonstrates that WOM, both in the case of weak ties and strong ties,1 has a deeper influence in information dissemination than advertising. Over the years, research has confirmed the powerful influence of WOM on perceptions, expectations (Webster 1991; Zeithaml et al. 1993; Lee and Youn 2009), attitude, and customer behavior (Dye 2000). Referral WOM can be used by customers as an important source of prepurchase information (input WOM) or after the experience as a way of offering information and recommendations to other customers (output WOM) (Buttle 1998).

social media class

Word-of-Mouth and Electronic Word-of-Mouth

The spread of the Internet and wireless systems, with the consequent increased use of social media by customers (OECD 2012), highlight the need to reconsider the traditional concept of WOM (Stauss 1997; Buttle 1998; Breazeale 2009; Cheung and Thadani 2010, 2012). The opportunity for individuals to share their experiences with other people all over the world (Dellarocas 2003; Inversini et al. 2010) takes power away from companies and delivers it into the hands of consumers (Hennig-Thurau et al. 2004). Online user-generated content can be shared through posted reviews (consumer opinions on apposite websites such as blogs or commercial review websites), mailbags (customer opinions on the seller’s website), electronic mailing lists and personal emails (consumer opinions sent by email), chat rooms and instant messaging (one-to-one real conversation on the Internet and Mobile), and posts on social networks (posts on Facebook, Linkedin, etc.).

In the light of these trends, eWOM can be defined as “…any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet” (Hennig-Thurau et al. 2004). However, this kind of communication is not limited to brands, products, or services but can be related also to an organization, a destination, etc. (Buttle 1998).

The analysis of the traditional concept of WOM and of the definition of eWOM is a useful preliminary step to an identification of the main differences between the two concepts. A first aspect to be considered is the nature of the message. Unlike the traditional concept of WOM, eWOM is generally a written message, more and more visual (Rosen 2009),2 not necessarily direct because customers publish their impressions on the Net often without addressing them to a specific known person.3 They publish user generated content (text, images, and videos) about their experience which remains on that website. The message is therefore persistent because it does not vanish easily and asynchronous because it is not necessary for the interaction between the communicator and the receiver to take place at the same time (Cheung and Thadani 2012). On the contrary, other consumers can read these reviews even after a long period of time (Buttle 1998; Hennig-Thurau et al. 2004; Breazeale 2009), while searching for information online about a specific product or service (Ward and Ostrom 2002). The persistence of the message in online repositories makes it also possible for companies and researchers to measure eWOM (Cheung and Thadani 2012; Cheung and Lee 2012), an operation that was extremely difficult in the case of traditional WOM. Moreover, for what concerns accessibility, in the case of traditionalWOMcustomers may ask the opinion of people they know, generally composing small groups, whereas in the electronic environment, millions of people, usually strangers, can gain access to the opinions of others (Libai et al. 2010) also for long periods of time (Hennig-Thurau et al. 2004; Hung and Li 2007; Park and Lee 2009). In this context it is difficult for the reader to determine the credibility of the message because the information comes from individuals who have little or no prior relationship with the seeker (Chatterjee 2001; Xia and Bechwati 2008; Schindler and Bickart 2005), are geographically and culturally dispersed (Gruen et al. 2006) and belong to diverse backgrounds (Litvin et al. 2008). Therefore, customers activate “weak-ties” with others in order to obtain information on specific features of the product (Brown and Reingen 1987; Gruen et al. 2006).

Online WOM can be distinguished in “organic/intrinsic,” that occurs spontaneously by the customer, or “amplified/extrinsic,” that occurs when the company encourages customers to accelerate the spread of WOM (Godes and Mayzlin 2004; Libai et al. 2010).4 These actions are the base of viral marketing campaigns in which a company develops online marketing messages and stimulates customers to forward these messages to other members of their social network (van der Lans et al. 2010).5 Even though, as mentioned before, WOM is different from advertising, the act of rewarding customers in several ways for the action of spreading reviews (Buttle 1998) can generate a credibility bias especially in the online environment where the source of the message is unknown.

Electronic Word-of-Mouth Outcomes

Over the last few years, we have witnessed an increasing interest by researchers on the topic of eWOM. Several studies have endeavored to explain how people are influenced by received WOM information.

Most studies about eWOM communication adopted a dual process theory of human information processing (Cheung and Thadani 2012) that “divides the mental processes underlying social judgments and behavior into two general categories depending on whether they operate automatically or in a controlled fashion” (Gawronski and Creighton 2013). The most prominent dual process theories, mainly used in eWOM research, are the elaboration likelihood model (ELM) (Petty and Cacioppo 1984) and the heuristic systematic model (HSM) (Chaiken 1980). These models try to answer a central question: how different aspects of a persuasive message (e.g., strength of arguments, attractiveness of the source) influence the effectiveness of persuasive appeals. Other interesting dual process models investigate how attitudes are formed and changed and the mechanisms through which attitudes guide behavior. This is the case of Motivation and Opportunity as Determinants-MODE model (Fazio 1990) and the Dual attitude model (Wilson et al. 2000).

The cited theories have been employed by authors in different ways to analyze the impact that eWOM has on customer attitudes and consequently on behavior and purchase intentions and decisions. Recent reviews of the literature on the topic show that eWOM studies can be classified into two levels (Cheung and Thadani 2010, 2012): a market-level analysis, focused on the impact of eWOM on product sales by examining objective data extracted from specific websites (i.e., reviews on TripAdvisor) (Chen and Xie 2005; Chevalier and Mayzlin 2006; Dellarocas and Zhang 2007; Duan et al. 2008; Zhu and Zhang 2010) and an individual-level analysis, focused on the influence that the communication process between a communicator and a receiver may have on attitude and purchase decisions (Park and Kim 2009; Cheung et al. 2009).

Several academic studies on the topic of eWOM point out the impact of consumer reviews on attitude, purchase intentions, and customers’ decisions (Schindler and Bickart 2005; Goldsmith and Horowitz 2006; Park et al. 2007; Buhalis and Law 2008; Law et al. 2008; Doh and Hwang 2009). In turn, Chang et al. (2005) found that attitude has a significant impact on online purchase intentions and decisions. According to Gruen et al. (2006), online customer-to-customer exchange activities have a considerable effect on the overall value of the firm’s offering and consequently on the loyalty intentions.

The economic impact of reviews on companies’ financial performances was demonstrated also empirically by analyzing in particular the valence (positive or negative) of the message and the volume of reviews (Chevalier and Mayzlin 2006; Liu 2006; Dellarocas 2003, 2006, 2007; Forman et al. 2008; Villanueva et al. 2008; Luo 2009; Godes and Mayzlin 2009). Although the previous view is the most widespread, some other studies showed that customer comments on the web are predictors of sales, but do not influence them (Chen et al. 2004; Duan et al. 2008). Schindler and Bickart (2005) found that customers consult online reviews for these main reasons: to gather information about brands or products by learning about the experience of other people and to support or confirm a previously-made decision. Even in these cases, and even though sometimes people search for information just for fun, with no serious intention to purchase and with an apparent passive approach, this action can influence future purchase decisions.

The role played by WOM recommendations in consumers’ decision-making processes depends on the type of product. This is especially true of services or intangible products (Murray and Schlacter 1990; Gremler 1994) that present a higher involvement and perception of risk due to the difficulties in evaluating their quality prior to consumption (Baccarani and Golinelli 1992; Rosen 2000, 2009; Dye 2000; Laroche et al. 2004; Zeithaml et al. 2012). Moreover, in services industries, the feature of inseparability between service production and consumption and the importance of the customer experience make the influence of online recommendations even more important (Lindberg-Repo 2001; Grönroos 2000). For these reasons, the impact of eWOM on consumer behavior has been an interesting topic for many scholars who study the services industries and its subsectors. In particular, the phenomenon has been examined also in relation to the travel and tourism industry, main objects of this blog, and a very important business in the services sector. In tourism and hospitality, online customer reviews generally affect information searching, holiday planning, and purchase decisions (Gretzel and Yoo 2008; Gretzel 2007; Litvin et al. 2008; O´Connor 2008; Papathanassis and Knolle 2011; Sidali et al. 2009; Vermeulen and Seegers 2009; Ye et al. 2009, 2011). A recent study by Anderson (2012) demonstrates how the score generated by the online feedbacks of guests can increase hotel performance in terms of occupation index and RevPar.



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The Digital Media Strategy Blog: Social media class: The Concept of Word-of-Mouth
Social media class: The Concept of Word-of-Mouth
The Digital Media Strategy Blog
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